October 22, 2020

My parents lived by 4 money rules that helped them buy land, give back to their community, and retire comfortably without debt

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  • My parents had four pillars that guided their financial decisions: invest in yourself, spend according to your values, march to the beat of your own drum, and give back to your community.
  • These pillars helped them buy land and maintain a working farm that fed our family, grow their money through low-cost investing in index funds, and retire comfortably without debt.
  • Today, as a financial planner, these pillars still guide my financial decision making.

My parents came from two very different upbringings. 

My father grew up in extreme poverty. At times, he lived without electricity or running water. His father dropped out of high school and was in and out of work, and his mother had a high school diploma and worked as a grocery clerk. 

My mother was raised in an upper-middle class family in the Bay Area. Her father was a pharmacist and owned a pharmacy on Haight and Ashbury in San Francisco, and her mother was a college-educated art teacher. 

Although their childhoods were quite different, my parents had four financial pillars that I continue to live by. 

Pillar I: Invest in yourself

The education level with the highest return on investment is an associate’s degree. Klaus Vedfelt/Getty Images

My father believed his ticket out of poverty was an education. Doubling down on his athleticism and grit, he earned a full-ride collegiate athletic scholarship. Developing a passion for education and love of learning, he pursued a Masters in microbiology and then a doctorate of veterinary medicine. He practiced at a large animal clinic for a few years before returning to school for yet another doctorate — a PhD in veterinary pathology. 

Jorg Greuel/Getty Images

The profit from the sale of their first home allowed my parents to purchase a new home with a rental unit on the same property that paid for their mortgage, as Dad’s $13,000 annual academic stipend didn’t stretch far enough. Mom also worked as a nurse to support the family. 

Five years later, he completed a PhD and accepted a job in a small college town. The second doctorate significantly increased the starting salary and positioned him well for raises, career advancements, and stability by earning tenure. Within eight years of completing his second doctorate, his sizable educational debt was paid off. 

Later, when my sisters and I were older, my mom pursued a Master of Science in nursing. This required her to leave our family for eight weeks in the summer for three years; a nanny was hired to help take care of us. The months she was not in school, she worked, which financed her education, along with a portion covered by her employer. She became the first nurse practitioner in our town and more than doubled her prior nursing salary.  

What was unique about my parents is that their lifestyle remained relatively the same despite what their education did for their earnings. They didn’t buy new cars, spend a lot of money, or acquire a lot of material possessions — other than a few too many tools and DIY supplies. They were deliberate with their spending and saving. 

Pillar II: Get clear on your values, and spend your time and resources accordingly

More than anything else, my parents valued living a financially modest lifestyle. They didn’t need or desire flash or prestige, rather a way of living that allowed for clean air, clean food, a slower pace, and independence. They lived these values by prioritizing one key thing — land. 

In 1985, shortly after my parents moved for my father’s job, they purchased 10 acres of land for $50,000. Their dream was to cultivate this land into their little oasis, consisting of a modest home and small working farm. In order to save money, they did as much of the work themselves as they possibly could. My mom served as the general contractor, building a 2,400-square foot custom home for approximately $140,000. Together with the land, they financed $190,000 with a 30-year fixed loan at 12%. Later, when interest rates decreased, they refinanced to 8%. They judiciously paid this debt down by paying more than the fixed monthly payments and allocating any extra cash flow to eliminating their mortgage. Their strategy worked, as they paid off the mortgage in 18 years, well before retirement. 

Ahead of their time, they strategically incorporated ways to decrease their carbon footprint and lower their monthly bills. They made thoughtful decisions, like facing the house south for the solar gain, installing a water-to-air heat pump, choosing double-pane windows, and over-insulating the house. The property had lower property taxes and no sewer or water bills — all of which allowed our family to live quite inexpensively and below our means. This left a healthy amount of cash to be saved and invested.  

The working farm also provided independence. Our family was fed from our land, enjoying home-grown fruits, vegetables, and animal products. This made my parents feel happy and financially secure — no matter what life threw at us, we could feed our family quality food and sustain a simple, modest life.    

Pillar III: March to the beat of your own drum

Let’s face it, this type of lifestyle in the ’80s and ’90s was a little eccentric. My father was a nerd, and my mom attempted to be a bit more hip, but they weren’t exactly up for a style icon or “cool parent” award. And they really didn’t care. They were used to doing things according to their values, and happily ignored keeping up with the Joneses. 

They took the same approach with investing. Prior to Vanguard becoming a household name, my parents began to align their investing strategy with Vanguard’s founder, Jack Bogle. Bogle’s ideas were still a bit contrary to the thinking of the time, and were mocked and dismissed by the investment management industry. This was because his ideas aligned with the investors, not the stockbrokers or star active portfolio managers. 

You can invest in an index fund through your 401(k), IRA, or a brokerage account. FG Trade/Getty Images

Warren Buffett credited Bogle’s approach with helping “millions of investors realize far better returns on their savings than they otherwise would have earned” through low-cost investing via index funds. Vanguard took this commitment to low-cost investing seriously, making its customers (investors) the owners of the funds. With no outside shareholders, there is little incentive to turn a profit,  allowing Vanguard to run “at cost” for its investors. And when it comes to investing, costs matter. 

Investing in your company’s 401(k) shouldn’t be complicated. 
Hero Images/Getty

Incorporating Bogle’s investment strategy, along with maximizing their employer 401(k) match and annual contribution limits, provided financial security. Additional contributions included Roth IRAs and a taxable brokerage account. 

Roth IRAs give you more investment options than a workplace plan. urbazon/Getty
Charles SchwabBasic Schwab brokerage account for hands-on trading; Schwab Intelligent Portfolios, a robo-adviserCommission-free ETF and stock trading online; $5 for phone trades, $25 for broker-assisted trades  
SoFi InvestSelf-directed Active Investing account; managed Automated Investing portfoliosCommission-free ETF, stock, trading; expense ratio on SoFi ETFs higher than some other providers
FidelityFull range of tax-advantaged retirement accounts along with taxable brokerage accountsCommission-free ETF and stock trading; selection of no-transaction-fee mutual funds
TD AmeritradeOnline trading platform that’s great for new investors as well as thinkorswim, a platform for advanced investorsNo minimum balance or recurring fees on self-directed accounts; 0.30% annual fee on managed accounts; $49.99 fee for some mutual fund trades
Interactive BrokersIBKR Lite (basic account) and IBKR Pro (pro-level account)Different pricing depending on account type: Lite offers commission free-ETF and stock trading; Pro may charge up to $10/month if minimums not met
PublicBasic trading platform that’s great for new investorsCommission-free stock and ETF trades
StockpileSimple and easy-to-navigate platform for kidsTrades are 99 cents; additional fees for gift cards

Perhaps this financial discipline prepared them for a severe storm — my father’s cancer diagnosis at 44. We had good insurance and were financially responsible for out-of-pocket maximums, experimental drugs, and eastern medicine treatments. After 10 years, he approached the end of his life. My mother was able to take a seven-month leave of absence from work to care for him. Disability payments and FMLA benefits helped supplement their income. 

After his passing, my mom took time to grieve. She then returned to work for 10 more years, retiring at 62 debt-free. She’s been prudent in her financial planning, utilizing my father’s Social Security from age 62 until next year when she turns 70, when she will switch to her own Social Security benefit after it’s been compounding at 8% interest. She also has a small pension from my dad that she’s used to start a 529 college savings plan for each grandchild. 

Unbeknownst to me during my teenage years, my parents were actually ahead of their time. Self-taught financial acumen, humility, and intellectual curiosity set them up to weather storms, stay the course, and give back.  

Pillar IV: Be a patron of your community 

Throughout the course of their marriage, my parents always left room in their budget and schedule to give back to their community. Mentorship and financial support of disadvantaged youth, monetary donations to the church and nonprofits, providing free farm-to-table meals to anyone in need, volunteering with the school, and pro-bono professional activities equated to well over 15% of their income. 

Giving provided a sense of responsibility outside our family and paid dividends beyond anything we imagined. The love and support we received from our community when my father passed was incomprehensible — it still gives me goosebumps. 

As a financial planner, I often refer back to my parents’ four financial pillars: invest in yourself, spend according to your values, march to the beat of your own (investing) drum, and give back to your community. My husband and I have just one wish for our family — that we can continue to live and honor my parents’ legacy through a financially intentional, meaningful life. 

By Anika Hedstrom 

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